Debates flare up over SOLonomics

Blockworks Research analyst predicts 2025 will be a big year for economic changes on Solana

article-image

Artwork by Crystal Le

share

With crypto markets stuck in a holding pattern and many Solana projects delaying big announcements until the Breakpoint Conference, people seem to be bored.

To fill the momentary void, some of the online crypto world has taken up arguing about Solana’s tokenomic structure — not a new debate by any means, but one that we’re yet to really engage with in Lightspeed. 

The main complaint about SOL’s tokenomics these days seems to be that its supply is growing via inflation too quickly. Sources I spoke to seemed split on whether this is in fact a problem Solana should or will address, or if it’s all a non-issue.

Inflation on the Solana network refers to the ongoing creation of new SOL tokens, which are distributed as rewards to validators and stakers. This process incentivizes validators to secure and maintain the blockchain, ensuring network security and decentralization. In simpler terms, inflation is how Solana compensates validators for their essential role in processing transactions and securing the network, while also providing stakers with a yield for participating in the system.

When Solana first enabled inflation, it was set that the token supply would increase by 8% per year, but the inflation rate is set to fall by 15% yearly. Today, inflation is closer to 5%. Long term, it will decline to 1.5%. 

This 5% inflation figure is commonly cited as a reason to be more bullish on Ethereum relative to Solana, as the ETH supply is inflating at a rate of around 0.7% currently. Inflation puts downward pressure on the price of SOL, since the existing supply is diluted by new tokens. There’s a bit more nuance here, since you can argue that inflation amounts to a value transfer from non-stakers to stakers, since inflation rewards eventually are paid out to stakers. 

Still, in a new Lightspeed podcast episode, Blockworks Research analyst Dan Smith told me he predicts economic changes are coming for Solana in 2025.

“I feel this changing in the wind,” Smith said, where it “doesn’t feel necessary” to be emitting so many SOL tokens in inflation.

Nate, an anonymous figure helping run the Aurora validator, said he thinks the current inflation level creates a lot of “value extraction,” adding that it would probably be workable to cut validator rewards in half.

Still, Solana is a large network with several stakeholders, and a change like altering the inflation rate — and thus the amount of reward doled out to validators — would take some serious coalition building.

Switchboard co-founder Chris Hermida said he could see proposals coming up to lower inflation, but it doesn’t seem like there will be a “massive outcry” at the current inflation rate, especially when the rate is “(relatively) similar to many other large networks.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

Ethena Labs is leaping from its flagship synthetic dollar, USDe, to a full product suite—USDtb, iUSDe, and the Arbitrum-based Converge Chain—designed to marry crypto-native yields with TradFi-grade compliance. Our analysis shows how expanding into CME, ETF options, and tokenized Treasuries could lift protocol revenue from sub-$500 million in a bear case to several billion dollars if favorable regulation and institutional adoption align.

article-image

The L1’s Interwoven Stack is the most opinionated tech stack yet

article-image

Bitcoin is still rising, 11 years after the documentary film The Rise and Rise of Bitcoin

article-image

Arch Labs CEO told Blockworks that the team plans to launch a native token, but declined to give details

article-image

CEO Mike Silagadze tells Blockworks that the US is “open for business” and why its DeFi bank offering is the first of many

article-image

Doing one thing well and leaving everything else out is often what disruptive technologies do best